10 Ways Austerity is Awful for Law Students

 

vicken-artIllustrated by Vicken Antounian

Austerity is terrible for almost everyone, but when federal spending is cut and taxes are raised, some sacrifice more, and some sacrifice less. So, in response to the deficit hawks’ claim that the budget must be balanced, the justice-minded should always reply: “On whose back?”

Although law students aren’t the most financially burdened group in society, austerity undoubtedly makes things much worse for us. Here are ten ways in which the austerity paradigm—a worldview based on an irrational phobia of budget deficits—crushes law students at Columbia and across the country.

#1. Insane Debt

Interest rates on student loans are skyrocketing. Last year, Congress spiked the interest rates on federally-subsidized loans; for example, federal graduate PLUS loan rates increased from 6.41% to a heavy 7.21%. Rates for private student loans are higher, with some lenders charging north of 12%. High interest rates—not to mention ballooning principals—are unnecessary and unjustified. There is no sound macroeconomic logic behind the federal government extracting profit from student loans rather spending more money on higher education as a public good.

#2. Inescapable, Insane Debt

Unlike other forms of consumer debt, student debt is almost impossible to obtain relief if repayment becomes untenable. The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) made both federal and private student loans nearly impossible to discharge in bankruptcy court. In the event of default on a student loan, our wages and unemployment benefits can be garnished, our tax refunds intercepted, and our Social Security payments withheld.

#3. Deflation

Austerity strangles growth and invites deflation—a continuous fall in price levels. Deflation is bad for debtors, as it increases the real cost of servicing a loan at the same time income stagnates. Normally, debtors suffering from the widespread effects of deflation turn en masse to bankruptcy for relief, but as mentioned above (see #2), this isn’t a viable option for most student borrowers.

#4. That Loan Forgiveness Tax Bomb

If you’re fortunate enough to have your student loans forgiven via the Income Based Repayment program (IBR), it could still be treated as taxable income by the IRS. What gives? This policy creates further undue economic hardship.

#5. Fewer Public Lawyers

The last time there was a massive, depression-level crisis, the Roosevelt administration recruited a veritable army of young, idealistic lawyers to build and run the U.S. Social Security Administration, the U.S. Securities and Exchange Commission (SEC) and the rest of the modern administrative state (thanks, in part,  to their competitive salaries relative to Big Law). Today, a lack of federal funding has turned entry-level public sector positions into rare gems. Instead of a swell in government hiring post-crisis, there has been stagnation. Austerity starves the public sector of the resources necessary to operate.

#6. Fewer Non-Profit Lawyers

As a result of public spending cuts, many non-profit legal services organizations are unable to afford hiring many, if any, recent graduates. Furthermore, those that do hire straight out of law school tend to rely on a few, concentrated sources of private funding (such as Skadden Fellowships, for example). Although there is nothing wrong with private charity, it would be better if legal services didn’t rely on it for their existence. Plus, private aid tends to dry up during recessions—exactly when people need access to cheap and free legal services the most.

#7. Socioeconomic Bias & Barriers to Entry

The high financial and psychological cost of student debt, combined with the precariousness of the legal market, deters many students of limited means from even applying to law school. Of those who are able to apply and attend, all but the most privileged are turned into debt-squeezed graduates with foreclosed horizons. Sure, there are loan forgiveness programs, but, when public interest jobs are scarce, “forgiveness” (see #4) isn’t guaranteed. As with the broader economy, brutal student debt and fear of unemployment feed off of each other and further disadvantage the already disadvantaged.

#8. Underfunded Courts

In 2013, Chief Justice John Roberts himself stated that mandatory budget cuts had taken an unprecedented toll on the federal court system and were poised to “pose a genuine threat to public safety.” This general trend continues today. And let there be no doubts—judicial economy, like austerity more broadly, hurts already financially disadvantaged clients and their advocates the most.

#9. Struggling Clients

Austerity exacerbates inequality and, together with rising poverty, it has produced a misshapen legal market – one with plenty of private attorneys servicing the top, some public attorneys servicing the very bottom, and few, if any, servicing the broad middle. For a young lawyer seeking to make a decent private sector living outside BigLaw, there are few viable options. And, of course, the poor suffer from a whole other slew of challenges—petty legal fees, for example,are often simply taxes by another name. This type of plundering is especially prevalent in communities like Ferguson, Missouri, where residents suffer from myriad other injustices. And, in a cruel irony, court-assisted attorney programs are funded by local and state government revenue obtained from regressive taxes on the very people the attorneys then represent.

#10. Bad Education

As our members have written before, austerity reinforces a worldview based on the false idea that money is scarce, and that fiscal responsibility means the same thing for currency-issuing governments as it does for households and businesses. This hyper-legal-formalismpervades the curriculum, and discourages law students from thinking critically about economic justice issues. Law professors should teach students how to think about the legal and institutional foundations of the economy, not merely how to import metaphors and decipher mathematical models of perfect(ly fictional) markets.

It is in the best interest of all law students, regardless of political persuasion, to reject austerity and to resist the tendency to treat balanced budget rhetoric as if it were the Law.

 

 

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